TCEQ denies Valero tax break

Texas environmental regulators have rejected Valero Energy Corp.’s request for a tax break that cities, counties and school districts feared would lead to devastating cuts to their budgets.

The Texas Commission on Environmental Quality denied the request because the San Antonio-based oil giant could not show an environmental benefit at its six Texas refineries from the equipment at the center of its application for the tax break.

Texas law provides property tax exemptions for equipment that reduces pollution at the refinery. Valero, however, sought a tax break for hydrotreaters, which are used to produce low-sulfur fuels. In this case, the lower emissions come at the tailpipe.

If TCEQ had granted the exemption, Valero stood to gain up to $130 million a year in property tax relief from cities, counties and school districts, officials said. The company earned $1.2 billion in profits for the most recent quarter, its best quarterly results in four years.

“It’s a nice Christmas gift to many cities, counties and school districts around the state that would have had to shell out millions to a rich oil company,” said Matthew Tejada, executive director of Air Alliance Houston. “Justice and logic can still prevail in the state of Texas.”

See here and here for some background. TCEQ had denied this request once before but reviewed it again at the urging of three of its commissioners. I’m glad to see that wasn’t enough to change their minds. Valero has 20 days to file an appeal, but hopefully this will be the end of it. It would be nice if the next Legislature closed this potential loophole once and for all. Hair Balls has more, and a statement from Sens. Rodney Ellis and Wendy Davis is beneath the fold.

Following a call by Senators Ellis and Davis to protect Texas schools, TCEQ rejected a pollution control tax break request filed by a refinery company that failed to meet the statutory criteria of providing on-site environmental benefits. The tax exemption would have required a school district outside of Houston to refund tens of millions in tax dollars. It was a pivotal decision because dozens of similar requests remain pending.

“This is a major victory for the people and school children of Texas,” Ellis said. “I am pleased that TCEQ did the right thing. Texas schools are already struggling with the $5 billion in cuts this session; allowing huge companies to essentially rob our school children of another $100 million would have been unconscionable.”

“School districts across the state are certainly breathing a sigh of relief today that the TCEQ staff has not buckled under political pressure and that the agency is rejecting this request that would potentially bleed hundreds of millions from Texas classrooms,” Davis said. “We must fight for every dollar for our public schools, especially following the more than $5 billion in state funding cuts that are impacting our schoolchildren.”

Senators Ellis and Davis had called on TCEQ to reject the request because the company’s investment failed to meet the letter or spirit of a 1993 Texas constitutional amendment that allows for tax exemptions when companies install pollution control equipment that provide an on-site environmental benefit. Earlier this month, Senators Davis and Ellis submitted a formal request for an opinion from the Texas Attorney General to clarify the law. In their letter to the AG, they wrote that the request does not meet the statutory guidelines of the law because “… the equipment at issue provides no environmental benefit at or near the site.”

In communications with TCEQ and the Texas AG, Senators Ellis and Davis had said that San Antonio-based Valero Energy Corp.’s request, if approved, would require a school district just outside of Houston to cough up tens of millions of dollars. And the refinery company’s request before TCEQ could have had a broad impact on Texas school funding as dozens of other requests similar to Valero’s remain pending.

The request that was rejected today by TCEQ staff was filed by Valero in 2007. It was already rejected once by the TCEQ staff. But that earlier recommendation was disregarded by Governor Perry’s politically-appointed TCEQ Chairman Bryan Shaw, who asked the agency staff to re-evaluate Valero’s request. Shaw has been criticized as an industry ally. Perry has received the second-most donations in Texas from Valero – more than $147,000 from the company, its PAC and employees since 2004, according to the National Institute on Money in State Politics. Shaw has also stood with Perry in public denials of climate change being caused by humans and he was recently accused of censoring an environmental report on Galveston Bay by a Rice University oceanographer, removing any references to a causal connection between human activity and the rises in sea level or the changes in the climate.

Ellis and Davis requested the AG opinion to clarify the intent and the application of the 1993 law in order to assure that Texas taxpayers and schoolchildren are not victimized by political maneuvering that would override the intentions of the constitutional amendment.

Senator Ellis represents Senate District 13 and chairs the Senate Government Organization Committee.